Singapore-listed, Myanmar-based diversified group Yoma Strategic Holdings and Philippine conglomerate Ayala Corporation’s energy platform, AC Energy, have entered an agreement to establish a 50:50 joint venture that will see an investment of at least $30 million into Myanmar-based Yoma Micro Power.
The new JV plans to invest in Yoma Micro Power and will jointly explore developing around 200MW of
additional renewable energy projects within Myanmar including participation in large utility-scale renewable projects.
Post the investment and restructuring, which is planned for 2020, the joint venture is expected to hold at least 50 per cent of Yoma Micro Power.
Yoma Strategic currently holds 35 per cent in Yoma Micro Power, while Norfund and International Finance Corporation have 30 per cent each in the energy firm, it said in a statement.
Yoma Micro Power builds micro power plants and mini-grids to provide electricity to off-grid rural communities and telecommunications towers in Myanmar. Following the successful implementation of a 10-site pilot project in 2018, Yoma Micro Power is currently rolling out 250 micro power plants by end of 2019 and is expected to scale up to more than 2,000 sites by 2023.
“Supply of electricity is one of the largest opportunities in Myanmar and also one of the biggest bottlenecks for economic development… AC Energy’s international expertise in the renewable energy sector and the access to funding will be invaluable as we work together to service this huge, underserved market in Myanmar,” said Melvyn Pun, CEO of Yoma Strategic.
“This is a very meaningful investment for AC Energy, as we intend to participate in Myanmar’s renewables sector in a significant way,” added Patrice Clausse, COO of AC Energy Renewables.
Electricity consumption in Myanmar will grow at an average annual rate of 11 per cent until 2030 to achieve complete electrification in all households, which requires an expected investment of around $2 billion per year, according to World Bank’s estimates.
The local government is also planning to develop solar power to take up 5 per cent of the nation’s electricity. Coupled with a recent hike in electricity tariffs, it is becoming more attractive to invest in solar energy solutions to the commercial and industrial segments.
“The renewable energy sector is a scalable business that has the potential to generate a sizeable revenue stream with recurring cash flow to complement Yoma Strategic’s core businesses,” said Pun.
He added that Myanmar has one of the lowest electrification rates in Asia, with more than 60 per cent of the population without access to grid electricity, particularly in rural areas.
“There is a need to significantly increase generation capacity and build out last-mile distribution infrastructure, which Yoma Micro Power has embarked upon.”